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What is Overdraft Protection and Do I Need it?

You might pride yourself on being a wise spender. You are financially aware of how much money you have in your different accounts and you never plan to spend more than you know you can afford. You might dismiss overdraft protection as a safety net for consumers who always find themselves in money trouble. However, learning more about overdraft protection can help open your eyes to something even you might benefit from as a consumer.

What is overdraft protection?

Essentially, overdraft protection is protection that prevents things like a cashed check, ATM withdrawal, or debit card transaction from causing the balance in your account to drop below zero and causing an NSF (non-sufficient funds) fee or overdraft fee. With overdraft protection, you can link your checking and savings accounts to avoid triggering those fees.

Why do I need it?

NSF and overdraft fees can become costly quickly without overdraft protection. Checks and ACH withdrawals get returned unpaid to you (and to the recipient) causing a fee generally around $35 per offense from the bank and oftentimes another fee from the merchant, creditor or recipient’s bank. You can also get charged per day for these fees.

For example:

A graduate has decided to pay off her student loans by having $500 automatically taken from her account each month. Because she set up overdraft protection when she opened her checking account, last month even though she only had $400 in her account, the charge still went through. Instead of bouncing the check due to insufficient funds, her linked overdraft protection took the $100 from another account and saved her from dealing with fees from the bank and the student loan provider.

How do I get Overdraft Protection?

At Radius Bank we offer linked overdraft protection. Linked overdraft protection links up to three different accounts to your personal checking account for overdraft protection. All you have to do is fill out the form and you will be free from unnecessary fees.

Overdraft protection is recommended so your transactions won’t be denied. Open your Checking account or Savings account so you can link to different funds when you need it.

Sometimes life gets busier than usual and expenses add up to be a bit too much. Be prepared with overdraft protection.

About the author

Kathleen Barrett

As the Vice President of Marketing at Radius Bank, Kathleen has had experience in the financial services industry for over ten years. Ten years ago, while working for a non-profit focused on helping consumers work their way to financial freedom, Kathleen found her passion for financial education. Her current role puts her at the forefront of online banking trends, allowing her to share her expert advice for your personal financial needs.